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Procuring Survival

Author

Listed:
  • Cappelletti, Matilde
  • Giuffrida, Leonardo Maria
  • Rovigatti, Gabriele

Abstract

We investigate the impact of public procurement on business survival. Using Italy as a laboratory, we construct a large-scale dataset of firms—covering balance-sheet, income-statement, and administrative records—and match it with public contract data. Employing a regression discontinuity design for close-call auctions, we find that winners are more likely to stay in the market than marginal losers after the award and that the boost in survival chances lasts longer than the contract duration. We document that this effect is associated with earnings substitution rather than increased business scale and that survivors experience no productivity premium. Securing contracts relaxes credit constraints and acts as a mechanism for survival.

Suggested Citation

  • Cappelletti, Matilde & Giuffrida, Leonardo Maria & Rovigatti, Gabriele, 2024. "Procuring Survival," CEPR Discussion Papers 18796, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ceprdp:18796
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    Cited by:

    1. Gabriel, Ricardo Duque, 2024. "The Credit Channel of Public Procurement," Journal of Monetary Economics, Elsevier, vol. 147(S).
    2. Andrea Fazio & Erminia Florio & Gustavo Piga, 2024. "SMEs Performance in Public Procurement and the Italian Legality Rating," CEIS Research Paper 587, Tor Vergata University, CEIS, revised 13 Jun 2025.
    3. Audinga Baltrunaite & Tommaso Orlando & Gabriele Rovigatti, 2021. "The implementation of public works in Italy: institutional features and regional characteristics," Questioni di Economia e Finanza (Occasional Papers) 659, Bank of Italy, Economic Research and International Relations Area.
    4. Mensah, Justice Tei & Wankuru, Peter Chacha & Kirui, Benard K., 2025. "Public Procurement and Firms : Evidence from Kenya," Policy Research Working Paper Series 11227, The World Bank.

    More about this item

    Keywords

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    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement

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